Yahoo Finance A Piece Of The Puzzle Missing From Akoya Biosciences, Inc.'s (NASDAQ:AKYA) Share Price
It's not a stretch to say that Akoya Biosciences, Inc.'s (NASDAQ:AKYA) price-to-sales (or "P/S") ratio of 3.6x right now seems quite "middle-of-the-road" for companies in the Life Sciences industry in the United States, where the median P/S ratio is around 4.5x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.
See our latest analysis for Akoya Biosciences
How Has Akoya Biosciences Performed Recently?
Recent times have been advantageous for Akoya Biosciences as its revenues have been rising faster than most other companies. One possibility is that the P/S ratio is moderate because investors think this strong revenue performance might be about to tail off. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Akoya Biosciences.
What Are Revenue Growth Metrics Telling Us About The P/S?
In order to justify its P/S ratio, Akoya Biosciences would need to produce growth that's similar to the industry.
Retrospectively, the last year delivered an exceptional 36% gain to the company's top line. Pleasingly, revenue has also lifted 77% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.
Shifting to the future, estimates from the eight analysts covering the company suggest revenue should grow by 27% per year over the next three years. That's shaping up to be materially higher than the 6.9% each year growth forecast for the broader industry.
In light of this, it's curious that Akoya Biosciences' P/S sits in line with the majority of other companies. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.
What We Can Learn From Akoya Biosciences' P/S?
We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
We've established that Akoya Biosciences currently trades on a lower than expected P/S since its forecasted revenue growth is higher than the wider industry. There could be some risks that the market is pricing in, which is preventing the P/S ratio from matching the positive outlook. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.
You should always think about risks. Case in point, we've spotted 2 warning signs for Akoya Biosciences you should be aware of.
It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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